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VOL. 126 | NO. 134 | Tuesday, July 12, 2011

Q2 Mortgage Counts Fall 24 Pct.

By Andy Meek

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A slide in mortgage activity between April and June, coinciding with a plunge in home sales, adds up to a housing market in Shelby County that’s still shell-shocked.

And whether or not anyone wants to believe the picture will improve anytime soon, significant headwinds still abound. Fixed mortgage rates are on the rise, and joblessness is still a drag on not only housing but the economy at large.

In Shelby County, banks and mortgage lenders made 1,879 purchase mortgages during the second quarter, down 24 percent from the 2,477 mortgages during Q2 2010, according to the latest numbers from real estate information company Chandler Reports, www.chandlerreports.com.

Data for this report included purchase mortgages only, not refinances.

Between those two quarterly periods, total mortgage volume in the area sunk to $274.4 million in Q2 from $371.3 million in Q2 2010.

Lenders who notched gains in the number of mortgages they made during Q2 were few and far between. They included Churchill Mortgage Corp. (to 21 in Q2 from eight mortgages in Q2 2010), USAA Federal Savings Bank (to 29 from 26) and Merchants and Farmers Bank (to 30 from 22).

The ugly housing picture is indicative of how widespread the recession’s pain is felt. Banks have tightened lending standards, for example, and buyers now generally have to put down more money up front.

The numbers also suggest not everyone who qualifies for a mortgage thanks to the rock-bottom interest rates today wants to take on that new debt. And the stubbornly high rate of joblessness, of course, is behind the troubles of some existing homeowners.

“It’s all about housing and jobs,” said Brent Westbrook, business development officer for Argent Trust Co. of Tennessee. “Until the housing sector gets some stability underneath it and we see some housing starts pick up, then we can’t really be expected to grow, because that’s such a big part of our economy.

“Until we get those right, there’s not going to be a full-blown recovery and we’re not going to be out of the woods yet.”

Nationally, mortgage applications dropped 5.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending July 1.

The MBA’s forecast projects an economic rebound in job growth over the third and fourth quarters of 2011. But it also notes a growing risk that the economy will continue to disappoint.

Mortgages Slide 28 Pct. in June

The second quarter of 2011 saw disappointing numbers for the Shelby County housing market, with the number of purchase mortgages in the quarter down 24 percent from Q2 2011. And that was the same trend reflected in the numbers for June.
Banks and lenders made 698 mortgages in Shelby County in June 2011, down from 967 in June 2010 – a nearly 28 percent drop. That resulted in total mortgage volume for June dropping to $105.3 million from $148.4 million during that same period. And the average mortgage amount dropped to $150,900 from $153,480.
At least June was a modest improvement over May’s performance. June beat May’s numbers in all three of those metrics – number of mortgages, average mortgage amount and total dollar volume.
From May to June, the number of mortgages rose to 698 from 602; average mortgage amount rose to $150,900 from $144,373; and total volume rose to $105.3 million from $86.9 million.
Community Mortgage Corp. was the top lender last month with 67 mortgages averaging $154,232 and totaling $10.3 million. It was followed by Magna Bank (53, $179,470, $9.5 million) and Wells Fargo Ltd. (50, $153,329, $7.7 million).

– Andy Meek

“We expect that both a slow purchase market and a decrease in refinance activity as the number of eligible borrowers shrinks will lower mortgage originations for the full year 2011,” the MBA’s market commentary for June reads. “The continued decline in rates associated with weaker economic data, policy uncertainties, and global uncertainties have resulted in a much slower decline in refinance activity than expected.

“With home sales at a reduced pace and purchase applications still at depressed levels, purchase originations will decrease in 2011 compared to 2010.”

Ranked by their number of mortgages during Q2, the list of busiest lenders in Shelby County was topped by Community Mortgage Corp., with 215 mortgages during the quarter that totaled $31.5 million.

That was followed by Magna Bank (with 150 mortgages and $27.5 million in volume). Next came Regions Bank (112 mortgages, $16.4 million), Wells Fargo (105 mortgages, $17.5 million) and Mortgage Investors Group (83 mortgages, $11.6 million).

The biggest change in mortgage types between the two quarterly periods included a big jump in mortgages with FHA down payment assistance. Those climbed to 15 in Q2 from one in Q2 2010.

Similarly, the number of two mortgages taken at the time of sale jumped to 61 in Q2 from four in Q2 2010.

“The measures the government threw up to try and halt the slide in home prices didn’t work, because prices keep hitting new lows,” said Chad Cunningham, chief investment officer with IronHorse Capital Management. “But I don’t think they were a failure either, because they blunted the velocity of the decline.

“In the long run, time heals all wounds. It’s just going to take time for consumers to deleverage.”

Chandler Reports is a division of The Daily News Publishing Co. Inc.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 52 374 8,123
MORTGAGES 52 433 9,632
FORECLOSURE NOTICES 22 103 1,461
BUILDING PERMITS 218 906 17,513
BANKRUPTCIES 45 252 5,658
BUSINESS LICENSES 0 143 3,091
UTILITY CONNECTIONS 24 152 3,402
MARRIAGE LICENSES 38 158 1,846

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